Worldline Q3 2024 Earnings Call Highlights

In the recent earnings call for the third quarter of 2024, Worldline (EPA: WLN) CEO Marc-Henri Desportes reported a slight decline in organic revenue by 1.1%, totaling approximately EUR 1.2 billion for the quarter. Despite this, the company maintains its full-year guidance for 2024, expecting organic growth of around 1%, adjusted EBITDA of EUR 1.1 billion, and free cash flow of EUR 0.2 billion. Worldline is focusing on strategic initiatives and partnerships to drive future growth, particularly in Merchant Services, and confirmed their financial strategy, including leveraging the Power24 initiative to optimize costs.

Key Takeaways

• Worldline's Q3 2024 revenue declined slightly by 1.1% to EUR 1.2 billion, with year-to-date revenue at EUR 3.5 billion.
• The company maintains its full-year guidance for 2024, projecting organic growth, adjusted EBITDA, and free cash flow.
• Merchant Services saw a decrease due to merchant terminations and slower growth in Online verticals.
• Financial Services revenue fell by 8.3%, but growth is expected in 2025.
• Worldline is targeting a leverage ratio of about 1.5x adjusted EBITDA by the end of 2025.
• The joint venture with Crédit Agricole is set to launch in H1 2024, expected to contribute to future growth.

Company Outlook

• Worldline is targeting mid- to high single-digit growth in Merchant Services by H2 2025.
• The company aims to optimize its cost base through the Power24 initiative, with targeted leverage of approximately 1.5x adjusted EBITDA by the end of 2025.
• Management is committed to maintaining a strong financial structure and optimizing operating models.

Bearish Highlights

• Merchant Services experienced a 2.7% decrease in net new revenue.
• Financial Services revenue dropped by 8.3% due to a reinsourcing process at a major customer.

Bullish Highlights

• Merchant Services Trusted Services and Omnichannel Interaction showed strong performance.
• The company anticipates growth improvements from Q2 2025 following the resolution of the FS impact.

Misses

• The company experienced a slowdown in growth compared to Q2, particularly in Northern Europe, while Southern Europe remained strong.

Q&A Highlights

• Management discussed the focus on pruning non-synergistic assets and targeting around 10% of revenue for potential divestment.
• There was a 20% growth in partnerships with Independent Software Vendors (ISVs) in 2023.
• Worldline is enhancing its competitive position against companies like Adyen and Stripe in the SME segment.

In conclusion, Worldline's third-quarter performance showed some challenges, but the company is actively implementing strategies to rebound and achieve growth. With a solid financial structure and strategic partnerships in place, Worldline is positioning itself for improved performance in the upcoming quarters.